FAQ – Inflation Reduction Act

Apprentices are required to be utilized on Inflation Reduction Act projects for any contractors that have had 4 or more employees performing manual/physical labor on site for the project, unless the Good Faith Effort exemption is met.

A list of Department of Labor recognized apprenticeship programs within the locality of the project can be found on the DOL’s Partner Finder (https://www.apprenticeship.gov/partner-finder).

Yes, as soon as a contractor uses 4 or more journeyman the contractor must employ apprentices.

Under IRA Final Rule, the wage determination in effect at the time the contract for the construction, alteration, or repair of the facility is executed by the taxpayer (or the taxpayer’s designee, assignee, or agent) and a contractor.

It is not about the number of employees that have been on site at any given point; it is about the total number of employees employed throughout the duration of the project that would determine whether the contractor would be subject to the Participation Requirement. “Under section 45(b)(8)(C), each taxpayer, contractor, or subcontractor who employs four or more individuals to perform construction, alteration, or repair work with respect to the construction of a qualified facility must employ one or more qualified apprentices.”

Yes! Included in both the Proposed and Final Rule for IRA projects, it is stated that the Apprenticeship Participation Requirement is triggered once there are 4 or more TOTAL employees used on the project, regardless of if there are not 4 or more employees on site at one time.

The Proposed Regulations state that ” the request cannot or have been denied of a refusal of the taxpayer or any contractor or subcontractor to comply with the requirements and standards of the apprenticeship program. Since the program requires the contractors are registered with the state and carry a license, then the contractor will need to comply.

Regardless if the overall project apprenticeship percentage is being met by one contractor, all contractors and subcontractors performing work on the project that employ a total of 4 or more individuals are responsible for utilizing at least 1 apprentice on site. If the contractor does not have apprentices available to them, a request can be made to a Registered Apprenticeship Program in the locality to acquire an apprentice as a show of a Good Faith Effort.

That employee information is not required on payroll however, we do need the employee list by the end of the project.

The “Good Faith Effort” under the Inflation Reduction Act only applies to apprentices, and it does not appear there is an equivalent means of exception for employing journeymen. While we do understand the difficulty of finding qualified individuals to be employed as journeymen on projects in given localities, it is important to note that if there is no journeyman to supervise the apprentices employed (in a 1:1 ratio as required by your Registered Apprenticeship program), Alliant advises those apprentices to be paid at the journeyman rate and would not count their hours as apprentice labor hours. Thus, the hours worked by apprentices with inappropriate supervision by journeyman would not count towards the apprentice percentage required for the project.

Per Section §1.45-12 (c)(1) the following information may need to be provided by the project owner along with payroll records when applying for the increased tax credit under the IRA: Identifying information for each employee including the name, last 4 digits of social security or tax identification number, address, telephone number, and email address.

Yes

The contract date between the project owner and each prime contractor.

The executed contract date between the taxpayer and prime contractor. In addition, the construction type being utilized on the project and the county work is being completed in.

Signed into law on August 16, 2022, the Inflation Reduction Act (IRA) invests in domestic energy production, promoting the clean energy market. It includes provisions for increased clean energy tax credits or deduction amounts if prevailing wage and apprenticeship requirements are satisfied. This investment will impact clean energy projects starting on January 29th, 2023.

4 or more unique employees listed on payroll.

Contractors need to employ/request for apprentices when they employ 4 or more different employees on site.

https://www.apprenticeship.gov/partner-finder

For strictly IRA projects, the prevailing wage rates can be found on the SAM.gov website.

The primary responsibility lies with the taxpayer claiming the IRA tax credit. Taxpayers should monitor their contractors’ compliance closely to ensure they are meeting the prevailing wage and apprenticeship requirements.